November 9, 2022

A new recession-proof asset class

Let’s agree, the economy is heading toward a recession. As Goldman Sachs’ Chief European Economist, Sven Jari Stehn said “The profound economic challenge the U.K. is facing is effectively the combination of the cost-of-living crisis, high inflation, a recession setting in and then navigating the fallout from this fiscal U-turn for the public finances,” and this is not the story just for UK. Germany and many other European countries are expecting a recession as gas prices rise and the job market settles down. But it is not all bad news.

A lot of investors have made their fortunes during downturns like this, as they provided the opportunity to purchase assets at a lower price than usual. But as with all investing strategies, it is not easy to predict when the best price will be, how long it will take to see a profit, or if it will just go south altogether (we saw a lot of NFT owners in this situation recently). That begs the question, what are the best investments during a recession?

Well, even sophisticated investors are going back to zero-risk assets to balance the risk/return in their portfolios. Why hold or take on new equity positions hoping for a decent return in the long run, when even a zero-risk T bill can give you a 4% yield a year? The downside of this rational behavior will be a lot less growth fuel going to innovative entrepreneurs and companies, eventually slowing down the pace of technological evolution and overall economic growth. Our suggestion is to find an asset class that is both as rational as a T-Bill in terms, but still supports innovative companies to scale.

Introducing Subscriptions As An Asset Class. Most innovative tech companies sell their services using a subscription model. Owning stock of these companies, in the current market environment, means being prone to very high volatility, influenced by the market outlook, news, etc. But the economic downturn, or volatility in stock prices doesn’t affect the value of the short-term cash flow that the subscribers of these companies create. Levenue offers a way to buy a part of the short-term cash flow of these subscriptions at a discount. Yes, that is right! You buy some of their subscriptions, and receive the monthly cash flow attached to them for the next 12 months, giving YOU predictable income, no costs, and most importantly, completely uncorrelated to the effect of the fed’s hikes on the long-term economic outlook.

We actually have a full page dedicated to this, showing you how we do it, and how you can benefit from this new asset class that is changing the world. Click the link below to learn more:

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